When Lyft rolled into Dallas last fall, it was a popular cab alternative for city-dwellers who couldn't afford Uber's "surge pricing" and who also didn't need to travel very far. But that's about to change.
Starting tomorrow afternoon, Lyft's service area in Dallas will expand to a much bigger grid around the city, making the company more competitive with Uber. That seems like good news for customers, but be warned: that extra service is going to cost more. Lyft is also changing its pricing model in Dallas, using a similar, surge pricing-like program.
Uber was hit with accusations of price-gouging when it introduced its own "surge" pricing program nationally. Lyft has clearly been trying to avoid that, portraying its own surge program, called Prime Time Tips, as something created to benefit the drivers. "100% of the extra tips given during Prime Time will go directly to drivers," the company website says. "Lyft will be the only company that does not take any fees from extra ride tips at peak times."
In an email to Unfair Park, Lyft spokesman Paige Thelen adds that Lyft's program is superior to the surge-pricing models used by other, unnamed competitors: "This differs from other company models, such as surge pricing where the company takes a percentage of the increased amount," she writes, because Lyft promises not to keep any of the extra tip money.
Well, giving drivers bigger tips does sound nice. But the extra tip money is only there because Lyft drivers are also losing their hourly base pay. Originally, Lyft drivers in Dallas were promised a "floor" pay of $15 an hour. During busy times, they could earn more--as much as $20 an hour.
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"When we first launch in a city, we pay drivers a guaranteed amount to ensure there are rides available for new passengers using the app," Thelen adds. "Now that Dallas is growing quickly, we have finished this beta period." Instead, drivers will be paid per ride--keeping 80 percent of the funds from each ride and 100 percent of the tips.
In an email to drivers, Lyft makes the case that they will no longer need the "floor" pay anyway because Lyft is doing so well: "Now, awareness is growing and Prime Time Tips will raise your earnings even more. This means Dallas no longer needs the floor," the company told drivers.
Whether that pans out will depend on Lyft's success--and whether or not Dallas plans to introduce any regulations to mess it up. "The not-so-nice thing is Dallas being the big ass, sprawly, pretty-comfortable-with-drunk-driving city that it is, we'll end up driving further to get to customers and the tips program probably won't go into effect very often," a driver tells Unfair Park.
On the plus side for corporate headquarters, a bigger coverage area for Lyft means that the City Council will no longer be able to make bogus complaints that the service is redlining.